Primus inter pares

We empathize with the homeowners on the coast of South Carolina where Allstate, S.C. Farm Bureau and State Farm are dropping nearly 20,000 Homeowners Insurance policies since August 2006.These companies are dropping them to minimize their exposure if a storm hits.

I am appalled at what I am hearing from politicians, the Myrtle Beach Chamber of Commerce, and builders from the Grand Strand.The politicians would like to expand the wind pool for homeowners who can’t get coverage because of the high risk of exposure.The wind pool covers a small sliver of land near the ocean.This system allows insurers to spread the risk with all the other homeowner policy owners in South Carolina that has insurance with a particular insurance company to keep the cost low for the folks living on this sliver of land..

The politicians along the coast would like to expand this current hurricane insurance area to include all counties of Horry, Georgetown, Berkeley, Charleston, Dorchester, Colleton, Beaufort and Jasper counties.

Brad Dean, president of the Myrtle Beach Area Chamber stated that “The problem has gotten so big it is scaring people away – which could hurt a state dependent on the $16 Billion tourism industry” and Doug Wendel, president and CEO of Burroughs & Chapin Co. Inc. feels the issue is chasing away investors, with more than 8000 condos for sale. Senator McConnell said, “ If the economy collapses on the coast, it will affect the entire state.”Grand Strand leaders are saying everyone in the state benefits from the taxes generated by the coast’s booming industry, which will suffer if an insurance fix isn’t found.

My dear friends along the Strand, Newberry county property owners have just received a devastating tax increase from one to two hundred percent on our property taxes because of mismanagement from our county council.Many homes have gone up for sale.People are borrowing money to pay the tax.Our county council appears to be looking for ways to cut back the taxes.We chose to live here in Newberry, because of real friendly folks, growth has not been excessive, and taking a smaller risk of the weather affecting our way of life.Most of you folks along the Strand have chosen to live there. You have assumed the higher risk for the enjoyment to be near the ocean, knowingly moving to a flood-plain elevation.

Mr. Wendel’s statement of 8000 condos being vacant and the problem being insurance chasing away investors is inaccurate to a point.Insurance may be part of the problem but to have such a large glut of surplus condos is telling me there is mismanagement from the counties.Someone did not plan ahead.These condos for investors are a higher risk for insurance companies than for homeowners because of the long periods of time an investment condo may be left vacant.

Mr. Dean and Senator McConnell’s statement that any loss of the $16 billion tourism industry would hurt the entire state is correct.However, if a major storm came through it would be devastating anyway even if you did or did not have the quick fix on insurance.It would still take years to recover.I would also like to note that part of the $16 Billon tourism industry tax is from folks like me that vacation along the strand and invite family, friends and business associates from around the country.We already spend some of our hard earned money there.I do not want to pay an additional hidden tax by having my homeowner insurance rates further increased to pay for the expansion of the wind pool area.Leave the current wind pool area as is.

I strongly suggest not looking at the quick fix band-aid approach but start thinking outside the box.Do not let the insurance companies dictate terms of how they want to maximize their profits.Ask them what could help them other than increasing the wind pool area to stabilize affordable insurance. One idea would be to increase the minimum deductible in these areas to $2500 – $5000.

Allow the folks in these homes to provide money on a tax-deductible or some tax incentive basis to make their property more resistant to storm damages.

I have researched ways to make my home in Newberry more wind and rain resistant. Wind damage accounts for only a fraction of the destruction.The greatest destruction is caused by water infiltration, not catastrophic structure failure. I have read of new nails for hurricane area buildings that will withstand uplift forces of over 271 lbs / square foot.There are other new innovative ways to make buildings more resistant to hurricanes.

One of the web sites PATH a public-private partnership for advancing housing technology http://www.pathnet.org/sp.asp?id=12387 had some great ideas.Look at installing front doors that swing out instead of into the house.Out-swinging doors are more resistant to wind loads and do a better job preventing water infiltration. I have also read permanent or removable shutters reduce forces on the structure and minimize water and wind related damages to the interior by protecting windows. Using hurricane straps by lining up bracing and tie-downs at critical load points to maintain the integrity of the load path. Use baffled ridge vents and off-ridge vents instead of unbaffled vents. Unbaffled vents tend to allow wind-driven moisture to enter attic spaces or the cavities of cathedral ceilings, causing moisture damage and mold growth. Use light-gauge steel straps to anchor the first story to the foundation. Install a natural gas powered generator in the home. Homes subject to water infiltration can more easily prevent mold growth and rot if they dry out quickly. Generators allow fans and dryers to be used quickly after a hurricane, when electrical power is usually gone, often for extended periods. Apply elastomeric sealant at concrete walls. These finish coatings prevent water absorption during heavy storms. Pay special attention to seal at the wall’s snap-tie locations. Extend fascia board to terminate below the underside of the soffit. This helps keep water out of the eaves. Additional reinforcing by adding steel reinforcing around windows and sliding glass doors helps keep these units in place during high winds.If replacing a roof, a secondary roof covering, using peel-and-stick roof underlayment mitigates water intrusion if roof shingles are lost.

I have great confidence in our legislature and governor to speak to experts on ways to help minimize this problem along the Grand Strand.We do not have to increase the burden on every one else in South Carolina. Give folks the correct long-term solutions they need not a band –aid approach..

Lou Neiger has worked in the Insurance Financial Planning field since 1981 and earned his CLU designation from the American College in Bryn Mawr, Pa.

Lou is a writer for the Dutch Fork Chronicle serving Newberry and Lexington County and has been published in several papers as a guest columnist.He and his family live in Newberry.

How will expensive or hard to get homeowners insurance effect the tourism industry? I could possibly see tax breaks for small businesses, but I do not think many tourists go to IOP of Folley to look at wealthy peoples houses. At the least, the higher insurance may increase tourism because it may slow growth and the destruction of our natural resources that attract tourists in the first place. Housing is speculative, that means if you lose, the rest of society should not have to pay for your losses; we are not yet a socialist society, though government is trying to get us there.